KiwiSaver is a voluntary superannuation initiative introduced by the Government. It has been established with the aim of encouraging long-term retirement saving by New Zealanders.
All new employees aged between 18 and 65 will be automatically enrolled in KiwiSaver (subject to certain exceptions).
Any existing employee, non working individual, minor or self employed person aged under 65 will also be able to join a KiwiSaver scheme.
Employees enrolled in KiwiSaver-compliant schemes make contributions directly out of their pay to their KiwiSaver accounts, which generally cannot be accessed for ultimate personal use until they reach the age of entitlement for New Zealand Superannuation (currently 65).
Non-working individuals, the self employed and minors make payments to their scheme provider.
Click on the questions below to find out more about KiwiSaver or for further information, visit Inland Revenue's KiwiSaver website www.kiwisaver.govt.nz.
To learn more about ABN AMRO Craigs KiwiSaver schemes, go to kiwiSTART.
Who participates in KiwiSaver?
New employees aged between 18 and 65 will be automatically enrolled into KiwiSaver (subject to certain exceptions), 4% of their gross pay will be deducted for the first two weeks and onwards, unless they “opt out” between the end of week two, and the end of week eight of employment. Refunds can be made to an employee who opts out by either the employer or via the IRD.
Existing Employees can opt-in at any stage. Enrolment in the scheme is not automatic for current employees, the self-employed, beneficiaries (non–workers) and under 18’s. These people can however choose to participate on a voluntary basis.
Those close to the age of 65 should be mindful that there is a minimum period of 5 years from initial entry before you can access your funds.
See “Who is eligible to open a KiwiSaver account?” and “Who participates in KiwiSaver?” above. Casual employers or contract workers will be subject to automatic enrolment if they have been employed for a period of more than 28 days. Casual agricultural employees will only be subject to automatic enrolment after three months.
What about the self-employed and non-workers or beneficiaries?
KiwiSaver makes provision for these groups to participate and receive incentives announced under KiwiSaver- without the need to pay 4% of gross pay after tax. This means that the government's matching tax credit incentive in addition to the $1,000 kick-start payment and fee subsidy can double a $20 per week contribution. These groups however cannot share in the exemption to ESCT (formally SSCWT). For more information on the incentives available under KiwiSaver go to KiwiSaver - What are the Benefits >>
Self employed, un-employed and beneficiaries direct KiwiSaver contributions directly to their chosen provider.
The minimum contribution rate for employees is currently set at 4% of before tax salary or wages (that means total salary, including bonuses, commission, extra salary and overtime). Alternatively they can choose to save 8%. KiwiSaver members can make one-off lump sum payments any time, through their scheme provider or Inland Revenue. The minimum 4% contribution can be split between the employee and employer until 31st March 2010 subject to employer agreement. See Investment Statement for details.
The self-employed, non workers and under 18’s are not required to save 4%- they are able to contribute directly with providers subject to the minimum contract terms of their chosen provider.
If you are self employed, or non employed - you have no minimum.
| EMPLOYEE CONTRIBUTIONS |
|
Contributions per week from gross Salary
|
| Annual Salary |
4% |
8% |
| $10,000 |
$7.69 |
$15.38 |
| $20,000 |
$15.38 |
$30.77 |
| $30,000 |
$23.08 |
$46.15 |
| $40,000 |
$30.77 |
$61.54 |
| $50,000 |
$38.46 |
$76.92 |
| $60,000 |
$46.15 |
$92.31 |
| $70,000 |
$53.85 |
$107.69 |
| $80,000 |
$61.54 |
$123.08 |
| $90,000 |
$69.23 |
$138.46 |
| $100,000 |
$76.92 |
$153.85 |
| $110,000 |
$84.61 |
$169.24 |
| $120,000 |
$92.30 |
$184.63 |
| $130,000 |
$99.99 |
$200.02 |
| $140,000 |
$107.68 |
$215.41 |
| $150,000 |
$115.37 |
$230.80 |
| $160,000 |
$123.06 |
$246.19 |
| $170,000 |
$130.75 |
$261.58 |
| $180,000 |
$138.44 |
$276.97 |
| $190,000 |
$146.13 |
$292.36 |
| $200,000 |
$153.82 |
$307.75 |
| $210,000 |
$161.51 |
$323.14 |
| $220,000 |
$169.20 |
$338.53 |
| $230,000 |
$176.89 |
$353.92 |
| $240,000 |
$184.58 |
$369.31 |
| $250,000 |
$192.27 |
$384.70 |
Employed or Non-Employed
If you are self employed, or non employed - you are not required to pay a regular contribution, you can put a lump sum in agreement with your KiwiSaver provider.
Compulsory employee contributions must be paid by your employer via the IRD’s PAYE system. Employees can make one-off lump sum payments any time, through their scheme provider or Inland Revenue. Employees can take a break from contributions by applying for a ‘contributions holiday’ (see ‘Can an employee stop making payments?’ for more details)
Is there any upper limit to an employee’s contributions?
The maximum level of regular contribution via PAYE is 8% of gross earnings. In order to make contributions outside of this 8%, members can contribute directly to IRD or contribute directly with their KiwiSaver provider.
ABN AMRO Craigs strongly recommend that investors take advice prior to any decision to join a KiwiSaver-compliant scheme or contribute more than 4% of earnings.
Once an employee has been a member for 12 months (this is generally from the date the IRD receives the application to be a member), an employee can suspend deductions from salary and wages for a period of between three months and five years, this is called a Contributions Holiday (KS6 Form). The IRD will write to members nearing the end of their Contributions Holiday enquiring as to whether contributions are to re-commence. Further Contributions Holidays may be taken consecutively.
Employees can continue to make some contributions directly to their scheme provider while on a Contributions Holiday.
All employee KiwiSaver payments automatically deducted from gross pay are issued via the PAYE system to the KiwiSaver Provider. A schedule of contributions will be matched against salary deductions and paid over to the KiwiSaver provider after an initial period of three months (this includes an interest payment minus tax at 19.5%). This three month period allows potential KiwiSaver members the opportunity to take financial advice and also for the Inland Revenue to create update and amend their records.
How do employees choose a KiwiSaver scheme?
Employees can choose their own scheme by notifying a KiwiSaver scheme provider directly. Employers are able to select a KiwiSaver scheme provider for their employees (deemed a preferred provider). Employees are automatically “opted in” to their employer’s preferred provider unless they choose their own preferred provider. If neither the employee nor employer selects a preferred provider the IRD will allocate the employee to a default provider.
If an employee changes jobs, becomes self-employed or leaves paid employment they will, in most cases, be able to continue making payments to their plan via Inland Revenue if employed or directly to the IRD via Automatic payments quoting their IRD number and tax type KSS or via direct payments to the scheme provider.
Is there any tax relief for KiwiSaver contributions?
Tax relief via zero-rated Employer Superannuation contribution Tax (formerly Specified Superannuation Contribution Withholding Tax) is permitted on contributions by employers (or via an employee salary sacrifice) up to a maximum 4% of earnings, where matched by the employee contributions from after tax pay.
Compulsory employer contributions will be required from 1 April 2008 (subject to the employee meeting certain eligibility criteria).
KiwiSaver funds will be available at the age of attaining entitlement to New Zealand Superannuation (currently 65) or after five years membership - whichever is the later. Earlier access may be provided in the event of:
- Death
- Extreme financial hardship (excludes tax credits and government kick start payment)
- Serious illness
- First home purchase (excludes tax credits and government kick start payment)
- Emigration (excludes kick start payment and tax credits. Member tax credits are automatically repaid to the Government).
For more details on accessing your KiwiSaver funds go to Start Investing Today and read our kiwiSTART Investment Statements.
KiwiSaver is designed to supplement NZ Super – to give a better standard of living in retirement. NZ Super is a universal benefit available to all New Zealanders. KiwiSaver membership does not affect eligibility for NZ Super.
How will KiwiSaver Scheme Providers be governed?
KiwiSaver schemes will be governed by trust deeds and regulated in a similar way to registered superannuation schemes. All KiwiSaver schemes will first have to be registered with the Government Actuary.
The KiwiSaver scheme providers will need to meet minimum ongoing requirements and disclose certain information to assist people in making a choice.
No. KiwiSaver is a personal superannuation scheme between each employee and their scheme provider. Neither the Government nor any other person guarantees returns. Each individual will need to review the performance of their scheme at regular intervals.